July 25, 2008

CP Group sets up new feed materials unit to cope with rising costs

Thailand's Charoen Pokphand Group has added a new feed ingredients trading business to its current 10 business groups, in order to cope with skyrocketing prices of raw materials used for animal feeds.

The new unit was formed in May to tap worldwide supplies of raw materials for animal feed, and to provide worldwide supply and demand information of the company's animal feed raw materials.

President and CEO of the new business unit Somchai Kungsanutr said rising energy costs is hurting the farm and food production sector, and the new business unit will help to reduce risks in the animal feed business.

Raw materials generally account for up to 70 percent of the total cost of animal feeds.

CP Group currently buys about 20 million tonnes of raw materials for animal feeds every year, which mostly goes to its China operators.

According to Mr Somchai, the new unit will also invest in agricultural futures in countries such as Laos, Cambodia, and India, for the purpose of securing raw-material supplies and to guard against future price fluctuations.